COMPARISON OF OLD VS NEW REGIME OF INCOME TAX – Budget 2020

BRIEF

The budget was expected to be a path-breaking one, being the first budget of the new decade. However, as has been the case with earlier budgets, it is bound to fall short of middle-class expectations, who will be required to make their choices very prudent so as not to indulge in too much of consumption at the cost of their compulsive savings u/s 80-C, which was meant generally for their old age. Most talked provision in budget is INSERTION OF Section 115BAC

The new Sec. 115BAC has proposed to be inserted to provide an option to Individual or HUF’s to pay tax at a lower rate subject to certain conditions. This will be applicable for AY 21-22 i.e FY 20-21 

 This section is optional and the option shall be exercised for every previous year where the assessee has no business income.
 Furthermore, if the assessee having business income than in that case the option once exercised for the P.Y. shall be valid for that P.Y. and for all subsequent years. The option can be withdrawn only once other than the previous year in which exercised and shall be continued with Normal provisions of Income Tax (other than 115BAC) thereafter, till ceases to have any business income. We have made a comparison chart showing taxation based on both regimes. tHIS WILL TAKE CARE OF SALARIED & NON-SALARIED ASSESSEE

At Last, we want to comment that, Indian Income-tax was WAY OF FINANCE PLANNING. Indirectly middle class was inspired to Buy house on Loan, Take Life insurance, take Mediclaim because There were Deductions (Still there but Mindset will change)

So Earlier, Invest and Save Tax

NOW, Why Invest? , Just Save Tax  

It is very saddening to see that, Previous generation has saved enough to enjoy retirement. Probably Our generation and our next generation will go away from the habit of investing and saving. 

Anyways, We are here comparing the new regime versus the old regime 

Interestingly, the new regime is definitely not beneficial for the Middle class & lower middle class. check below comparison